Springboard to Riches
A number of years ago a man named Rick called us to sell a division of his company. As we began our Comprehensive Business Analysis, we started hearing that the business was not operating very well. While sales were in excess of $100 million, pre-tax profits the previous year were only $100,000. Rick’s EBITDA was only $500,000.
His banker was not comfortable. Employee morale was relatively low. And we learned that Rick was seldom there. He had excellent accounting and tax support from his public accounting firm, an excellent lawyer, a decent banker, and a number of key employees who were all concerned about Rick’s lack of “leadership.”
Once we had completed the Comprehensive Business Analysis, one of our recommendations was for Rick to form an advisory board with two of his key employees on it. The board met alternate Monday mornings for four hours over a period of eighteen months and then scaled back to one meeting a month. We were pleased to be invited to sit on that board and watched the progress unfold as the business plans were put into place, implemented, and then realized.
The two key employees were properly motivated by an incentive program based on profit-sharing and had the support, guidance, and vision of a powerful advisory board. They supplied the leadership that had been deficient.
And two years later the business earned $5 million of pre-tax profit.
It’s important that the professionals who become part of your advisory board are prepared to work as a member of the team and not create their own team.
I have a board of advisors here at Robbinex composed of five men and women I respect.